Stocks surge; Dow back above 10K

Good earnings, data trigger buying

By

SusanLerner

NEW YORK (CBS.MW) -- Blue chip stocks posted their biggest one-day gain in nearly two months Tuesday as stocks staged a powerful rally amid good earnings news and a two-year-high in consumer confidence.

The Dow Jones Industrial Average
DJIA, -1.24%
closed up 123.22 points, or 1.2 percent, at 10,085.14, its biggest one-day gain since June 7 when it advanced 149 points.

Strategists were pleased with the gains but reluctant to call a market turnaround after recent multi-month lows.

"The market's been oversold for the past couple weeks and we were due for a rally -- it was just a question of when and from what level, said Peter Boockvar, equity strategist at Miller Tabak.

He said investors shouldn't read too much into the move other than that it might be a short-term stabilization.

"We need to see some follow-through, not just a one-day wonder," Boockvar said.

Contributing to gains were a couple of encouraging economic reports as the Conference Board said consumer confidence surged to a two-year high in July and the Commerce Department said that, although down, U.S. new home sales, came in at a seasonally adjusted annual rate of 1.33 million -- above the 1.27 million expected by economists surveyed by CBS MarketWatch. See Economic Report on consumer confidenceand home sales.

Peter Cardillo, chief market analyst and strategist at S.W. Bach, said the upcoming release of a barrage of economic data for July could be the major catalyst to really turn sentiment around.

"It may show reversal in some of the economic weakness, which will help rebuild confidence that the economy is continuing strong and earnings are not going to be as weak as investors are perceiving in the second half," Cardillo said.

Hugh Johnson, chief investment officer at First Albany thinks markets "will start to mark time" until more of the July data are released. Listen to the interview.

All but three Dow components finished in the green.

Verizon Communications
VZ, -1.07%
was the blue-chip gauge's big winner, logging a 3.7 percent gain after reporting second-quarter earnings of 64 cents a share on revenue of $17.8 billion, both topping the average analyst estimates compiled by Thomson First Call. See full story.

Another blue chip, DuPont
DD, -1.40%
however, missed second-quarter earnings estimates by a penny but revenue topped forecasts and the chemical giant boosted its 2004 earnings outlook to $2.25 to $2.35 a share, up from $2.10 to $2.30. See full story.

DuPont recovered from an intraday low of $41.14 to close up 1 percent at $42.31.

American Express
AXP, -1.49%
rose 1.1 percent. Deutsche Bank lifted its rating on the stock to "buy" after the financial group's second-quarter results topped the market forecast. The broker cited valuation and AXP's outlook and raised its price target on the stock to $57 from $52.

In the broader market, advancers outnumbered decliners by 5 to 3 on the New York Stock Exchange and nearly 21 to 9 on the Nasdaq. Big Board volume topped 1.6 billion shares while more than 1.7 billion shares traded on the Nasdaq.

Internet, retailers, oil services, hardware, brokers and biotechnology were the best sector performers.

Airlines were among the few groups moving lower as oil hit $42 a barrel.

Nortel Networks
NT
tumbled 16 percent after it said it continues to expect 2004 revenue to grow faster than the market, but that it was not meeting its operating cost and gross margin targets. See full story.

The focus remained on earnings, with a number of encouraging profit reports crossing many sectors.

In the bond market, the benchmark 10-year note closed down 28/32 to 101 4/32 to yield 4.60 percent, up from 4.48 percent at Monday's finish, its highest close since June 30. Losses worsened after a weak turnout for inflation protected bonds. See Bond Report.

The U.S. dollar rose against its major rivals following the consumer confidence data. The dollar gained 0.9 percent against the Japanese yen at 110.93 yen per dollar. The greenback was up 0.7 percent against Europe's shared currency, with the euro quoted at $1.2052. See Currencies.

Gold futures turned lower as the dollar gained ground. August gold closed down $3.30 to close at $387 an ounce on the New York Mercantile Exchange, after trading as high as $392.90 intraday. See Metals Stocks.

In the oil trading pits, September crude closed up 40 cents at $41.84 a barrel after tapping high of $42.22 in earlier trade. It was the highest close for a crude-oil contract since June 1. See Futures Movers.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.